Two of Canada’s largest public pension funds are selling their respective stakes in Express Pipeline System, a network transporting crude oil from Alberta to Illinois.
The infrastructure arm of OMERS pension plan and Ontario Teachers’ Pension Plan have struck agreements to sell their one-third interests in Express Pipeline System to Houston-based pipeline operator Spectra Energy Corp. for $430-million (U.S.) each.
The other one-third owner, Kinder Morgan Energy Partners LP – the current operator of Express Pipeline – is also selling its one-third position to Spectra.
Express Pipeline was one of the earliest infrastructure investments for both OMERS and Teachers’, which both bought interests in 2003.
The big pension funds have over the past few years been diversifying their investment portfolios away from equities and bonds and into such sectors as infrastructure, private equity and real estate.
“Express Pipeline was one of our first significant capital investments and has been an excellent asset for [infrastructure arm] Borealis since 2003. It is a great example of our focus on creating long-term value for OMERS,” Michael Rolland, president and chief executive officer of Borealis, said in a statement.
“We are happy to be selling to an established U.S. and Canadian operator like Spectra and excited about the potential to redeploy our capital in large-scale, global infrastructure assets.”
Stephen Dowd, Teachers’ senior vice-president for infrastructure and timberland, said Express has been a good investment for the fund.
“We have had a positive relationship with our partners, Borealis and Kinder Morgan, and we will continue to look at future opportunities in the pipeline sector,” he said in a separate news release.
Borealis Infrastructure has almost $20-billion (Canadian) in capital under management. OMERS has net assets of more than $55-billion.
“Borealis Infrastructure is a long-term investor that generates significant value by holding large-scale infrastructure assets, as well as selling them when market conditions are optimal. Our strategy continues to focus on buying and holding investments over the long term,” Mr. Rolland said in an e-mail message.
Teachers’ has about $117-billion in assets.
The proposed sale to Spectra is expected to close in the second quarter of 2013.
The Express Pipeline is a 2,763-kilometre crude oil transportation network extending from Hardisty, Alta., to Wood River, Ill., a major U.S. Midwest oil refining hub.
The pipeline consists of the Express line running from Hardisty to Casper, Wyo., and the smaller Platte line linking Guernsey, Wyo. to Wood River.